Many buyers don't realize how important it is not to make major credit purchases right before buying a home. Any monthly payments you are making for those credit obligations will decrease the size of loan you qualify for by a ratio of about 100:1. That's a big chunk of home buying power you're throwing out the window!

Let's say you have a new car payment of $350/mo. The amount of money you are qualified to borrow from most lenders will be about $35,000 less (100 x $350) than what you might have been able to borrow without that car loan. The same goes for consumer spending like credit cards, department store cards, etc.

In general, it's best to pay cash for items you need and keep your monthly credit payments low. This is just good advice whether you're buying a home or not!